The new Central Otago gold rush is just a trickle for most

Soaring gold prices have led to a rush of new interest in Central Otago’s old goldfields, but experts warn any bonanza will be hard won. DEBBIE JAMIESON reports.

The day Graeme Hutchins and his gold mining mates stumbled across an untouched seam of gold in a Central Otago river, they were dancing underwater.

“It was the only time we’ve struck a seam like this in 11 years of dredging.

“Every rock we picked up had gold under it. We were having a good time.”

Hutchins doesn’t want the name of the river publicly disclosed, nor the amount of gold the men found –such is the secretive nature of gold mining – but he says it’s proof there is still gold to be found in them thar hills.

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He’s not alone in his quest.

The number of applications to explore or mine for gold in New Zealand in 2020 almost doubled on the previous year to 121.

Gold prices also climbed on the back of Covid-19 disruptions, peaking at $3083 per ounce in August 2020.

A Ministry of Business, Innovation, and Employment spokesperson says the trend is especially noticeable in Central Otago and the West Coast – areas that had historically been prospected for gold.

In 2020 and 2021, there were 46 applications in Otago: 16 for mining, 18 for exploration and 12 for prospecting.

Otago University Emeritus Professor of Geology Dave Craw is not surprised by the rush of excitement.

“The price of gold goes up and people get interested, but if you’re going to develop a mine it takes a long time.”

The geographical pattern of the recent interest follows the routes taken by the miners of the 1860s gold rush – a phenomenon that made Dunedin the largest city in New Zealand for a time and Otago the financial centre.

Working the waterways and scratching away at the surface, those old timers claimed thousands of ounces of gold, Craw says.

Now technology, backed up by deep pockets, is enabling companies such as OceanaGold​ to dig much deeper into schist rock and turn up millions more ounces.

OceanaGold​ operates the Macraes mine, near Dunedin – New Zealand’s largest active gold-producing mine and a poster child for the industry.

Exploration began at the site about 1984 and mining has been under way since 1990, employing about 600 people at a time. In the last 30 years, it has produced 5 million ounces of gold, and it’s thought another 5 million remains.

At the current price of $2855 an ounce, the return is worthwhile but hard won, Craw says.

He estimates that about one in every 1000 gold mining applications turns into a successful mine.

“Everyone wants to have another Macraes because it’s been such a success. That’s the driver.”

Another Australian-based publicly listed company, Santana Minerals, has been watching closely and in 2020 bought out Matakanui Gold Company, a company started by Kiwis Kim Bunting and Warren Batt in 2014.

Building on historic information, the men have been exploring a 250-square-kilometre section of the Otago goldfields known as the Bendigo-Ophir project, about 90km west of the Macraes mine.

Bunting says work has accelerated with Santana’s involvement and in September the company announced an estimate of 643,000 ounces of gold at the site. They are hoping to upgrade that figure at the next announcement in about a month.

The site has good potential, but it’s early days, he says.

They want to be sure of a multimillion-ounce resource before applying for a mining permit and then working through the various and complex consent processes under the Resource Management Act, or its predecessor.

“There are supporters. This whole region grew on the back of the gold rush in the 1800s and a lot of the farmers came from gold mining stock,” Bunting says.

“A lot of people are asking when will we get mining started. Others say they don’t need a mine, and that this is wine growing country.”

Kelvin Dolton has spent five years negotiating the process as the sole director and shareholder of Foothills Mining.

His mining site is in the lower Nevis Valley and has been mined on and off since the 1860s. He’s picking up from work that was deserted in the early 2000s when the price of gold dropped.

The land has been deemed an ‘outstanding natural landscape’, and it has cost in excess of $300,000 to obtain nine resource consents (from the Central Otago District Council and Otago Regional Council) and reach agreements with Heritage New Zealand over the protection of historic tailings and the Department of Conservation on restoring lizard habitats.

There’s no secret there is still plenty of gold in Central Otago, he says. The difficult part is trying to get to it.

Once work starts on Dolton’s site in the next few weeks, he’ll be operating through winter with two staff members working 24 hours a day, seven days a week, to ensure the equipment doesn’t freeze

Serious gold miners are businessmen who have taken a risk, he says.

“But with the amount of time and money involved you’d be silly to go through it without the proven resource in the ground.”

Some fear the industry is at risk due to increasing pressure from environmental groups and those who want to protect the landscape as it is – locking out the opportunity to extract minerals from the ground.

Darryl Sycamore, a planner specialising in mining and the extractive industry, who has a personal interest in the industry, says his biggest concern at the moment is the Otago Regional Council’s proposed regional policy statement.

A guardian of Manapouri, Monowai and Te Anau lakes for the last nine years, he describes himself as pro-mining and environmentally aware.

“We cannot ignore that humans are part of the environment and each of us has an environmental footprint.”

Gold mining is a massive economic provider nationally, generating about $1 billion in export earnings each year, he says.

Previous regional policy statements acknowledged mining and provided a pathway to consent that enabled protections to be put in place, but the 2021 proposed statement is silent on mining.

If the statement proceeds in its present form it will become tougher for commercial operators but even more difficult for the hobby miners who make up about one-fifth of recent applications, he says.

From his home in Nelson, Graeme Hutchins says gold mining is not a business for him.

It’s an opportunity to get together a few times a year (never in winter) with a couple of mates, and stay in a caravan in one of the remotest parts of Central Otago.

“It’s the lifestyle. We get the guys together sit around the camp for a night, give the liver a bit of a thrashing. None of us are in it for the money, we just enjoy it.”

During the day they spend up to six hours in water dredging for gold. It’s hard work and sometimes everything goes wrong – like the year a storm destroyed their dredge.

But there are always a few days when they get lucky and a bit of gold fever strikes.

“It always pays for the petrol, the food and the piss, and a bit of repairs and maintenance, but it’s not something I’d like to do for a living.”